The Art and Science of an Estate Sale
Five sensible tips to come out ahead in any estate sale.
- 7 mins read
- August 5, 2019
Five sensible tips to come out ahead in any estate sale.
If you’re reading this article because it directly pertains to you: I’m truly sorry for your loss.
Losing a loved one like a parent is a grievous process to go through, which is made even more overwhelming by all the decisions you have to make as the next-of-kin…including what to do with the property of the deceased.
A good Realtor can’t take the pain away. But he or she can simplify an otherwise bewildering process, so you can move on with certainty, minimal stress, and the highest sales price you can get.
So what does a “successful” estate sale look like? In my experience, the crucial steps involve the following:
1. Achieve legal certainty with the estate.
The first step in any estate sale process is to clarify who the beneficiaries are, how much in sales proceeds they are entitled to, and what process this will take.
Many estate sales go through what is called “probate,” which means going through a court process guided by a personal representative. If your estate has already gone through probate, all you need to do is have your Realtor coordinate your attorney with the title company. Feel free to email me if you would like a great estate lawyer referral.
If your estate has not gone through probate, it’s not the end of the world. You will just need to provide your Realtor and title company the following items:
If there is no will, then all heirs will eventually have to sign at closing.
Having certainty about the legal structure of your estate early in the transaction will save you a lot of stress later. Not to mention prevent last-minute surprises.
2. Know your timeline.
When do you need the sale to close?
Are there any factors at work like a reverse mortgage, which will reduce your sales proceeds every month the home does not sell? Is the home at risk of foreclosure if it does not sell by a certain date? Did the deceased – or do you or the other heirs – have debts that need to be paid off by the sales proceeds?
Knowing your “when” is just as important as knowing your “why” when making a six-figure transaction.
3. Understand your market.
An estate sale may have unique characteristics behind it. But at the same time, it really is no different from any other kind of home sale. Your goal is to expose the property on the market to as many buyers as possible, and to sell it for as much market value as possible.
But what is “market value?”
Market value is the amount of money a typically-motivated buyer is willing to pay for your home, in a normal transaction. It is not a magical, fixed-in-place number. Nor is it a Zillow estimate. Market value is a range, which varies depending on factors that we both can and cannot control.
Examples of factors we cannot control:
Factors we can control:
Therefore, a sound marketing strategy for your home involves maximizing buyer exposure, coming up with a realistic price that is informed by the market, and being conscious of the effect condition has on both price and marketability.
4. Realistically assess the home’s condition.
After location and size, the physical condition of your home is one of the biggest factors that determines its value.
It’s pretty obvious, isn’t it? Buyers are willing to pay more for homes that are in great shape, and they expect discounts on homes with deferred maintenance or dated components.
Condition doesn’t just influence price, however. It also influences marketability, which means the amount of people who would even consider buying it.
Homes in great shape are very marketable, because a large amount of people want to buy them. This means competition is higher, and therefore they tend to sell very quickly when exposed to the market. Multiple offers are also common, and sellers often enjoy advantages in negotiation.
Homes with challenged condition have smaller buyer pools, because fewer people have the desire (and the money) to take on major home improvement projects. They therefore can take longer to sell, and buyers have comparatively more negotiating clout. Multiple offers are rare on these kinds of transactions.
It is often very important to determine how condition will interact with your pricing strategy. Full-blown remodeling is usually not the answer, as you typically won’t recover the cost in the final sales value. However, basic touch-ups that enhance presentability like new carpeting, paint, landscaping, and a deep clean are often cheap and cost-effective.
Staging your home is almost always a good idea, as it can highlight your home’s best features while taking attention away from deficiencies. As always, every property and niche neighborhood is unique in this respect, and your strategy will depend on a thorough analysis of the market.
Finally, a word on odor. Intangibles like smell have a profound effect on marketability. If your home smells like nicotine, mold, or pet stains for example, buyers will quickly run the other way. A bad-smelling house can be a death sentence for your property selling anytime soon. A smart seller should address any big marketability issue like this long before listing.
5. Make fact-based decisions.
Selling a home isn’t a single task. It’s a series of smaller decisions that, when well-executed, can net you the highest sales value in a reasonable amount of time. But it’s imperative that these decisions be made on the basis of real market data (including buyer feedback), and not pride or wishful thinking.
A good example is price. It’s not uncommon, when discussing listing price, for sellers to think or say something along the lines of “I need it to sell for at least $___.” The thing is, when was the last time you considered the seller’s finances or personal situation when you were a home buyer? What if your listing agent told you something similar about his commission?!
In most cases, pricing is extremely counter-intuitive. You actually tend to make more money by deliberately pricing lower than market value, because then you’re more likely to get multiple offers that bid the price up and give you favorable contract terms. That’s an example of making a fact-based decision vs. making an emotional decision.
Or, consider condition. If multiple buyers and their agents are commenting about the house’s condition not being worth the current price, do you:
The average number of days on market in our neighborhood for properties under $500,000 is about 5 days. If you don’t receive a written offer by that point, something needs changing. Whether it’s the price, a repair or two in the property, or the terms offered – you need to do something different then. Pragmatism is what will win the day in these situations – not digging in your heels.
In sum, selling houses is a very intense undertaking. This is doubly so when handling a stressful situation like an estate sale.
But an estate sale can certainly be made less stressful, when it’s handled by a Realtor who understands markets and economics, listens to your priorities, works proactively, and communicates frequently and honestly with you – even if it’s stuff you would rather not hear.
I am always available for any questions you may have pertaining to this topic. You can always call or text me at (253) 370-0201, or email me for more information. Good luck, and thanks for reading.